Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Shy v. Navistar Int'l Corp.

United States District Court, S.D. Ohio, Western Division

May 10, 2017

ART SHY, et al., Plaintiffs,
v.
NAVISTAR INT'L CORP., et al., Defendants. SUPPLEMENTAL BENEFIT COMMITTEE OF THE NAVISTAR, INC., RETIREE SUPPLEMENTAL BENEFIT PROGRAM, Intervenor-Plaintiff,
v.
NAVISTAR INT'L CORP., et al, Defendants.

         DECISION AND ENTRY SUSTAINING DEFENDANTS NAVISTAR INTERNATIONAL CORPORATION, NAVISTAR FINANCIAL CORPORATION AND INDIANAPOLIS CASTING CORPORATION'S MOTION TO DISMISS INTERVENOR-PLAINTIFF SUPPLEMENTAL BENEFIT COMMITTEE OF THE NAVISTAR, INC., RETIREE SUPPLEMENTAL BENEFIT PROGRAM'S COMPLAINT FOR ENFORCEMENT OF SETTLEMENT AGREEMENT (DOC. #498); INTERVENOR-PLAINTIFF'S COMPLAINT (DOC. #491) IS DISMISSED WITH PREJUDICE; JUDGMENT SHALL ENTER IN FAVOR OF DEFENDANTS AND AGAINST INTERVENOR-PLAINTIFF; CAPTIONED CAUSE REMAINS TERMINATED

          WALTER H. RICE UNITED STATES DISTRICT JUDGE

         Intervenor-Plaintiff Supplemental Benefit Committee of the Navistar, Inc., Retiree Supplemental Benefit Program ("Intervenor-Plaintiff' or "the SBC"), purports to represent retirees who are participants in the Navistar, Inc., Retiree Health Benefit and Life Insurance Plan (the "Health Plan" or "Base Plan"), and has filed a Complaint to Enforce Settlement Agreement ("Complaint"). Doc. #491.[1] The Base Plan was established by a Settlement Agreement that is discussed in greater detail below, and is governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and provides prescription drug benefits to participants. Doc. #491, ¶¶ 1-2, PAGEID #3158-59. The SBC alleges that, beginning in 2012, Defendants Navistar International Corporation ("Navistar" or the "Company"), Navistar Financial Corporation and Indianapolis Casting Corporation (collectively "Defendants") began misappropriating subsidies paid to Navistar, as the Base Plan's Administrator and Named Fiduciary, by the Center for Medicare and Medicaid Services ("CMS"). The SBC alleges that Navistar distributed the subsidies solely to Defendants, rather than using a portion of the subsidies to lower the amount of retiree contributions to the Base Plan. Id., ¶ 3, PAGEID #3159. The SBC argues that, by misappropriating the subsidies, Defendants have breached the Settlement Agreement. Id., ¶¶ 61-62, PAGEID #3172-73.

         Defendants have filed a Motion to Dismiss Intervenor-Plaintiffs' Complaint for Enforcement of Settlement Agreement ("Motion"), arguing that the SBC lacks standing to enforce the terms of the Base Plan. Doc. #498. For the reasons set forth below, their Motion is SUSTAINED.

         I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY [2]

         On July 28, 1992, Defendants "announced major reductions in the insurance and health benefits offered to the company's retired employees and their dependents." Doc. #446, PAGEID #2170 (citation omitted). A group of retirees led by an Art Shy ("Shy plaintiffs") filed suit against Defendants, and a Settlement Agreement was reached on May 27, 1993. Id. The Settlement Agreement, incorporated by the Court as a consent decree, established the Base Plan, under which Defendants and the retirees (or "participants") were required to make annual contributions to the Navistar International Transportation Corporation Retiree Health Benefit Trust (the "Trust"); the "Trust then pays for the participants' health benefits, including prescription drug costs." Doc. #491, ¶ 3, PAGEID #3159. The Settlement Agreement required Defendants and Plan participants to make periodic contributions to the Trust as part of the Base Plan's cost-sharing requirement. Id., ¶ 20, PAGEID #3162-63. Navistar became the Base Plan's Administrator and Named Fiduciary, "subject to the review authority of the Health Benefit Program Committee [('HBPC').]" Doc. #498-1, § 1.5, PAGEID #3249-50.[3]

         The Settlement Agreement also created the Navistar, Inc. Retiree Supplemental Benefit Program ("Supplemental Benefit Program"), and created the SBC to be the Supplemental Benefit Program Administrator and Named Fiduciary. Doc. #498-1, §§ 6.1, 6.2, PAGEID #3329-30. The Settlement Agreement required Navistar to "cooperate with the [SBC] and Supplemental Benefit Trust to provide for the reduction of premiums, co-payments, deductibles and other amounts which would otherwise be required to be paid by or on behalf of Enrolled Participants under the [Base Plan.]" Id., § 6.5(a), PAGEID #3332.

         While initially, participants' drug benefits were provided directly by the Base Plan itself, Doc. #491, ¶ 24, PAGEID #3163, the passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 created a prescription drug benefit ("Medicare Part D") administered by CMS. Pub. L. 108-173, 117 Stat. 2066. Effective July 1, 2010, Navistar unilaterally eliminated the Base Plan's prescription drug benefit for Medicare-eligible participants (including Plaintiffs), and required those participants to enroll in Medicare Part D. Id., ¶26, PAGEID #3164. From July 1, 2010, through December 31, 2011, Navistar, through the Trust, paid "fixed monthly premiums for a fully-insured Series 800 Medicare Part D Plan [('Fully-Insured PDP')]." Id., ¶ 31, PAGEID #3164. Despite decisions and orders from this Court requiring Navistar to reinstate the Base Plan's prescription drug benefit, Navistar never did so, and the Medicare-eligible participants were still required to obtain prescription drug coverage through the Fully-Insured PDP. Id., ¶ 28 (citing Doc. #373, 383).

         Under the Fully-Insured PDP, CMS and certain pharmaceutical manufacturers would remit subsidies intended to offset the cost of prescription drugs to SilverScript Insurance Company ("SilverScript"), which was the underwriter and administrator of the Fully-Insured PDP, and which later became part of CVS Caremark ("Caremark"). Doc. #491, ¶¶ 31-35, PAGEID #3164-65. In turn, SilverScript, and later Caremark, used the subsidies "to reduce the cost of the insurance premiums it charged the [] Trust to provide the drug benefit." Id., ¶ 36, PAGEID#3166. Under the Fully-Insured PDP, then, both Plan participants and Defendants, as contributors to the Trust, had their out-of-pocket costs for the prescription drug benefit reduced through the subsidies.

         However, Navistar, as Base Plan fiduciary, subsequently amended its contract with Caremark, and effective January 1, 2012, the "Trust assumed the liability for paying the underlying prescription drug claims (the 'Self-Funded PDP')." Doc. #491, ¶ 37, PAGEID #3166. Because the Trust became the payor of the claims, CMS and the pharmaceutical manufacturers paid the subsidies directly to Navistar. Id., ¶ 38. However, Navistar did not use the subsidies to lower the premiums paid by the Base Plan participants. Rather, Navistar distributed the subsidies to the Defendants, in essence, "using the Participants' share of the Subsidies to reduce their own obligation to make contributions to the . . . Trust." Id., ¶ 40, PAGEID #3167. The SBC claims that, from January 1, 2012 through April 2015, Defendants misappropriated approximately $26 million in subsidies that should have been passed on to the participants. Id., ¶ 41.

         Navistar's administration of the Base Plan has been subject to prior litigation in this Court. On June 4, 2010, Navistar (and the other Defendants in this case) filed a complaint against, among other persons and entities, the SBC. Case No. 3:10-cv-211, Doc. #1. In the complaint, Navistar alleged that it contributed shares of stock to the Supplemental Benefit Trust, which the SBC sold, id., ¶¶ 39-40, PAGEID #11, and used the proceeds therefrom to fund "comprehensive dental coverage, a comprehensive vision program, and hearing aid coverage." Id., ¶ 38, PAGEID #10. Navistar claimed that the SBC and others were preventing Navistar from obtaining the permanent and definite reduction in its accumulated postretirement benefit obligation ("APBO"). That reduction in its ABPO, Navistar alleged, was the "benefit of the bargain" it was supposed to obtain from the Settlement Agreement. Id., ¶ 77, PAGEID #17-18. Navistar sought a declaratory judgment capping its APBO or, in the alternative, rescinding or modifying the Settlement Agreement. Id., ¶¶ 87-119, PAGEID #20-26. A motion to dismiss was filed, Case No. 3:10-cv-211, Doc. #21, but before the Court could rule on the motion, Navistar dismissed the lawsuit. Case No. 3:10-cv-211, Doc. #22, PAGEID #663 (citing Fed.R.Civ.P. 41(a)(1)(A)(i)).

         On April 26, 2010, several unions and individual Base Plan participants filed a Motion to Compel Compliance with the Settlement Agreement, in response to Navistar's decision to abolish the Base Plan's prescription drug benefit and create the Fully-Funded PDP. Doc. #343.[4] On February 24, 2011, the Court sustained in part and overruled in part that motion, declaring "that Navistar was without authority to unilaterally substitute [the Fully-Funded PDP] for the prescription drug benefit adopted by the parties in accordance with the Settlement Agreement!, ]" but overruled the motion "to the extent that the [Plaintiffs] seek injunctive relief." Doc. #373, PAGEID #916. On September 30, 2011, after settlement negotiations between the retirees and Defendants failed, the Court ordered "Navistar to reinstate, on an immediate basis, the prescription drug benefit that was in effect before Navistar unilaterally substituted Medicare Part D for that benefit." Doc. #383, PAGEID #1000. Navistar was also ordered to reimburse the participants for any increased premiums they had paid from July 1, 2010, until that date. Id.

         On March 26, 2012, the SBC moved to intervene to enforce the Settlement Agreement, claiming that Navistar "failed to meet their [sic] obligations under the [Settlement [A]greement, with respect to the [SBC]." Doc. #395, PAGEID #1107, amended at Doc. #407. On February 6, 2013, the Court allowed the SBC to intervene, Doc. #414, and on February 15, 2013, the SBC filed a formal complaint to enforce the Settlement Agreement, Doc. #415, which Navistar subsequently moved to dismiss. Doc. #422. On March 29, 2013, the Court sustained the SBC's motion to enforce the Settlement Agreement. Doc. #426, vacated and remanded, Shy v. Navistar Int'l Corp., 781 F.3d 820 (6th Cir. 2015). In so doing, the Court held that the SBC had standing to enforce the Supplemental Benefit Trust Profit Sharing Plan ("PSP"), as the "SBC is a creation of the [Supplemental] Plan itself, with the express purpose and duty of enforcing the terms of the Supplemental Plan and the PSP." Id., PAGEID #1964.

         Further, the Settlement Agreement named both the SBC and Navistar as Program Administrator and Named Fiduciary for the Supplemental Benefit Program. Id., PAGEID #1965 (citation omitted). The SBC's status as a fiduciary, the Court noted, allowed the SBC to enforce the terms of the Supplemental Plan. Id. (citing 29 U.S.C. §§ 1002(21)(A), 1132). This Court, in so holding, concluded that the SBC's "dispute over what information Navistar had to provide under the Plan was not subject to the alternative dispute resolution procedures" set forth in the settlement agreement. Shy, 781 F.3d at 824. The Sixth Circuit, however, held that because "[i]n each claim[, ] the SBC is disputing information or calculations regarding Navistar's obligations to the Supplemental Benefit Trust that Navistar provided under its reporting obligations under the [Settlement [A]greement. This places each claim within the scope of the arbitration clause." Id. at ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.